MLM Strategy Quiz

What is the main idea behind the MLM strategy in multi-level marketing?

• To sell products through a single-level distribution model

• To increase sales by recruiting individuals at multiple levels

• To make money solely by recruiting new participants

• To sell products without a compensation plan

What distinguishes a lawful MLM program from a pyramid scheme?

• MLM programs have no real product that is sold

• Pyramid schemes often involve a real product that is sold

• MLM programs ensure compensation is based on sales volume

• Pyramid schemes provide compensation for recruitment without sales

Which of the following is NOT a recommended method to verify the legitimacy of a company?

• Checking how long the company has been in business

• Looking for positive customer satisfaction

• Paying or signing a contract in an "opportunity meeting"

• Searching for any lawsuits against the company

What should you ask for when considering joining an MLM program?

• The compensation structure and potential expenses

• Guarantees of profitability

• Opportunities for passive income without sales

• Short-term high returns on investment

What is a traditional tip-off to a pyramid scheme?

• High rewards for recruiting more than selling products

• A focus on selling products to the public

• Long-standing business operations

• Positive online buzz and customer feedback

What is a Ponzi scheme primarily characterized by?

• A legitimate business operation with high profits.

• An investment fraud where returns are paid from funds of new investors.

• A scheme where all investors gain equally.

• A business model based on selling products.

Which of the following statements best describes the outcome of a Ponzi scheme?

• It continues indefinitely without any risk to investors.

• It collapses once it becomes impossible to recruit new investors.

• It legally redistributes wealth among participants.

• It is a sustainable business model for long-term investment.

How did Bernard Madoff maintain the illusion of a legitimate business in his Ponzi scheme?

• By publicly disclosing all financial activities.

• By using genuine investment profits.

• By fabricating investment profits and secretive operations.

• By offering low returns to avoid suspicion.

What was the estimated amount of paper wealth involved in Bernard Madoff's Ponzi scheme?

What was unique about Scott Rothstein's Ponzi scheme compared to typical Ponzi schemes?

• It involved direct cash payments.

• It was based on selling bogus legal settlement agreements.

• It only operated in international markets.

• It provided high returns through legitimate investments.